8/10/2011 @ 9:23AM776 views

Billion-Dollar Brands: The Real Target for Activists and Bureaucrats

A flag similar to the one pictured here hangs in Washington Legal Foundation’s (WLF) headquarters. WLF’s founder and Chairman purchased the flag from an anti-business activist organization which created it to mock America. Its depiction of internationally known, made-in-the-USA corporate brands, he felt, is in fact a profoundly positive reflection on America. Brands, be they reflected in a corporate logo, a certain look or feel on a product package, or other imagery, constitute intellectual property worth billions of dollars. But in industries which make “disfavored” products – tobacco, “fattening” foods & beverages, and alcohol – such brands are being Targeted for extinction.

The Camel’s Nose Under the Tent. The highest priority targets for government regulators and health and legal activists around the world are, not surprisingly, tobacco brands. That tobacco companies and their products have been relentlessly sued, regulated, demonized, and taxed in every corner of the world is apparently not enough. International bureaucrats at the World Health Organization, along with their counterparts and legislators in countries like Canada, Britain, and Australia, have been pursuing “plain packaging” requirements which strip tobacco packs of images, colors, and trademarked branding. As related in a past WLF Legal Pulse post, Australia is moving forward with formal legislation to impose tobacco plain packaging. Tobacco companies have already filed a legal challenge to the impending mandate.

A WLF Monograph released in June, Erasing Intellectual Property: “Plain Packaging” Of Consumer Products And The Implications For Trademark Rights, explains how requirements such as Australia’s tread on international trademark protections. The authors argue that governments cannot rely upon “public health” exceptions to international treaties when advancing packaging controls because no scientific evidence proves that plain packaging will reduce smoking, especially among youth. Zealous pursuit of plain packaging without proof that the policies actually work reveals that regulators and activists are motivated by ideological, rather than public health concerns.

Retire the Tiger, Deflate the DoughBoy. While brand evisceration efforts advance against tobacco, regulators here in the U.S. have quietly begun moving against food and beverage brands. An Interagency Working Group (IWG) led by the Federal Trade Commission (FTC) has issued for public comment a proposed “
report” to Congress where it suggests that food companies retool products which “children” (ages 2-17) consume. If companies don’t retool, IWG says they should ”voluntarily” refrain from “marketing” such products to children. FTC officials have jawboned the media with arguments that the deep restrictions on commercial speech arising in the report are not mandates and are truly voluntary. In its
comment to the IWG, advertising agency Leo Burnett brilliantly retorted, “The proposals are as voluntary as going to your boss’s home when she invites you to dinner.”

The speech concerns are legion, as many comments, including WLF’s, make clear. Equally troubling, however, is how the IWG report targets iconic trademarks and brands. It states that packaging or labeling is “per se directed at children or adolescents if it prominently features child-oriented animated or licensed characters.” So not only would Santa Claus and the Easter Bunny be off-limits, but so would long-established, branded figures as the StayPuft Marshmallow Man® or the Pillsbury DoughBoy®. The end result: our federal government could be on the hook for billions of dollars in damages for illegally taking food companies’ property.

Alcohol Next in Line? International bureaucrats at WHO and at least one foreign government now have alcohol products and brands in their sights. WHO last year issued a “Global Strategy to Reduce Harmful Use of Alcohol,”which focused prominently on reducing alcohol marketing. Thailand, over the objections of the World Trade Organization (WTO) is reportedly going forward with efforts to impose an absurdly graphic series of warnings on all alcohol products. The warnings would take up 1/3 of the package, leading the WTO to examine whether alcohol producers’ trademark rights would be effectively infringed. Federal regulators in the U.S. have generally permitted the alcohol industry to self-regulate its marketing, but earlier this year, the FTC indicated it would be once again looking into activists’ claims that alcohol marketing leads to underage drinking. If FTC is going so far as to target packaging and long-established brands through its “voluntary” food marketing report, it is not unreasonable to think it could do the same to alcohol branding.

Such a move would be opposed by all wine, distilled spirits, and beer producers — most vehemently by small production wineries and distillers, and the growing craft beer industry. Severe government restrictions on imagery and branding would be devastating to such companies, which invest millions in making their bottles and packages distinctive and memorable. As related in the documentary Beer Wars, American craft brewers like Dogfish Head consider their use of creative labeling, trademarked tag-lines (“off-centered ale for off-centered people), and even use of proprietary printer fonts as irreplaceable weapons in their competition with the “big 3″ breweries.

Find Another Way. One can, and certainly should, question whether government should be in the business of influencing such basic consumer decisions as to what to eat and drink. But if government does act, targeting brands – and the logos and images that communicate them – should be the absolute last, not first, second, or third option, when devising public health policies aimed at “disfavored” products.

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